G.R. No.
150751 &nbsp &nbsp &nbsp &nbsp &nbsp &nbsp The CA denied petitioner’s Motion for Reconsideration in its November 7,
September 20, 2004
CENTRAL SHIPPING COMPANY, INC., petitioner,
vs.
INSURANCE COMPANY OF NORTH AMERICA, respondent.
DECISION
PANGANIBAN, J.:
A common carrier is presumed to be at fault or negligent. It shall be liable for
the loss, destruction or deterioration of its cargo, unless it can prove that the
sole and proximate cause of such event is one of the causes enumerated in
Article 1734 of the Civil Code, or that it exercised extraordinary diligence to
prevent or minimize the loss. In the present case, the weather condition
encountered by petitioner’s vessel was not a "storm" or a natural disaster
comprehended in the law. Given the known weather condition prevailing
during the voyage, the manner of stowage employed by the carrier was
insufficient to secure the cargo from the rolling action of the sea. The carrier
took a calculated risk in improperly securing the cargo. Having lost that risk, it
cannot now disclaim any liability for the loss.
The Case
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court,
seeking to reverse and set aside the March 23, 2001 Decision2 of the Court of
Appeals (CA) in CA-GR CV No. 48915. The assailed Decision disposed as
follows:
"WHEREFORE, the decision of the Regional Trial Court of Makati City,
Branch 148 dated August 4, 1994 is hereby MODIFIED in so far as the
award of attorney’s fees is DELETED. The decision is AFFIRMED in all
other respects."3
2001 Resolution.4
The Facts
The factual antecedents, summarized by the trial court and adopted by the
appellate court, are as follows:
"On July 25, 1990 at Puerto Princesa, Palawan, the [petitioner] received
on board its vessel, the M/V ‘Central Bohol’, 376 pieces [of] Philippine
Apitong Round Logs and undertook to transport said shipment to
Manila for delivery to Alaska Lumber Co., Inc.
"The cargo was insured for P3,000,000.00 against total loss under
[respondent’s] Marine Cargo Policy No. MCPB-00170.
"On July 25, 1990, upon completion of loading of the cargo, the vessel
left Palawan and commenced the voyage to Manila.
"At about 0125 hours on July 26, 1990, while enroute to Manila, the
vessel listed about 10 degrees starboardside, due to the shifting of logs
in the hold.
"At about 0128 hours, after the listing of the vessel had increased to 15
degrees, the ship captain ordered his men to abandon ship and at about
0130 hours of the same day the vessel completely sank. Due to the
sinking of the vessel, the cargo was totally lost.
"[Respondent] alleged that the total loss of the shipment was caused by
the fault and negligence of the [petitioner] and its captain and as direct
consequence thereof the consignee suffered damage in the sum
of P3,000,000.00.
"The consignee, Alaska Lumber Co. Inc., presented a claim for the value
of the shipment to the [petitioner] but the latter failed and refused to
 settle the claim, hence [respondent], being the insurer, paid said claim
and now seeks to be subrogated to all the rights and actions of the
consignee as against the [petitioner].
"[Petitioner], while admitting the sinking of the vessel, interposed the
defense that the vessel was fully manned, fully equipped and in all
respects seaworthy; that all the logs were properly loaded and secured;
that the vessel’s master exercised due diligence to prevent or minimize
the loss before, during and after the occurrence of the storm.
"It raised as its main defense that the proximate and only cause of the
sinking of its vessel and the loss of its cargo was a natural disaster, a
tropical storm which neither [petitioner] nor the captain of its vessel
could have foreseen."5
The RTC was unconvinced that the sinking of M/V Central Bohol had been
caused by the weather or any other caso fortuito. It noted that monsoons,
which were common occurrences during the months of July to December,
could have been foreseen and provided for by an ocean-going vessel. Applying
the rule of presumptive fault or negligence against the carrier, the trial court
held petitioner liable for the loss of the cargo. Thus, the RTC deducted the
salvage value of the logs in the amount of P200,000 from the principal claim
of respondent and found that the latter was entitled to be subrogated to the
rights of the insured. The court a quo disposed as follows:
"WHEREFORE, premises considered, judgment is hereby rendered in
favor of the [respondent] and against the [petitioner] ordering the latter
to pay the following:
1) the amount of P2,800,000.00 with legal interest thereof from
the filing of this complaint up to and until the same is fully paid;
2) P80,000.00 as and for attorney’s fees;
3) Plus costs of suit."6
Ruling of the Court of Appeals
The CA affirmed the trial court’s finding that the southwestern monsoon
encountered by the vessel was not unforeseeable. Given the season of rains
and monsoons, the ship captain and his crew should have anticipated the
perils of the sea. The appellate court further held that the weather disturbance
was not the sole and proximate cause of the sinking of the vessel, which was
also due to the concurrent shifting of the logs in the hold that could have
resulted only from improper stowage. Thus, the carrier was held responsible
for the consequent loss of or damage to the cargo, because its own negligence
had contributed thereto.
The CA found no merit in petitioner’s assertion of the vessel’s seaworthiness. It
held that the Certificates of Inspection and Drydocking were not conclusive
proofs thereof. In order to consider a vessel to be seaworthy, it must be fit to
meet the perils of the sea.
Found untenable was petitioner’s insistence that the trial court should have
given greater weight to the factual findings of the Board of Marine Inquiry
(BMI) in the investigation of the Marine Protest filed by the ship captain,
Enriquito Cahatol. The CA further observed that what petitioner had
presented to the court a quo were mere excerpts of the testimony of Captain
Cahatol given during the course of the proceedings before the BMI, not the
actual findings and conclusions of the agency. Citing Arada v. CA, 7 it said that
findings of the BMI were limited to the administrative liability of the
owner/operator, officers and crew of the vessel. However, the determination of
whether the carrier observed extraordinary diligence in protecting the cargo it
was transporting was a function of the courts, not of the BMI.
The CA concluded that the doctrine of limited liability was not applicable, in
view of petitioner’s negligence -- particularly its improper stowage of the logs.
Hence, this Petition.8
Issues
In its Memorandum, petitioner submits the following issues for our
consideration:
"(i) Whether or not the weather disturbance which caused the sinking of
the vessel M/V Central Bohol was a fortuitous event.
"(ii) Whether or not the investigation report prepared by Claimsmen
Adjustment Corporation is hearsay evidence under Section 36, Rule 130
of the Rules of Court.
"(iii) Whether or not the finding of the Court of Appeals that ‘the logs in
the hold shifted and such shifting could only be due to improper
stowage’ has a valid and factual basis.
"(iv) Whether or not M/V Central Bohol is seaworthy.
"(v) Whether or not the Court of Appeals erred in not giving credence to
the factual finding of the Board of Marine Inquiry (BMI), an
independent government agency tasked to conduct inquiries on
maritime accidents.
"(vi) Whether or not the Doctrine of Limited Liability is applicable to
the case at bar."9
The issues boil down to two: (1) whether the carrier is liable for the loss of the
cargo; and (2) whether the doctrine of limited liability is applicable. These
issues involve a determination of factual questions of whether the loss of the
cargo was due to the occurrence of a natural disaster; and if so, whether its
sole and proximate cause was such natural disaster or whether petitioner was
partly to blame for failing to exercise due diligence in the prevention of that
loss.
The Court’s Ruling
The Petition is devoid of merit.
First Issue:
Liability for Lost Cargo
From the nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence over the goods they
transport, according to all the circumstances of each case.10 In the event of
loss, destruction or deterioration of the insured goods, common carriers are
responsible; that is, unless they can prove that such loss, destruction or
deterioration was brought about -- among others -- by "flood, storm,
earthquake, lightning or other natural disaster or calamity."11 In all other cases
not specified under Article 1734 of the Civil Code, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence.12
In the present case, petitioner disclaims responsibility for the loss of the cargo
by claiming the occurrence of a "storm" under Article 1734(1). It attributes the
sinking of its vessel solely to the weather condition between 10:00 p.m. on July
25, 1990 and 1:25 a.m. on July 26, 1990.
At the outset, it must be stressed that only questions of law13 may be raised in a
petition for review on certiorari under Rule 45 of the Rules of Court. Questions
of fact are not proper subjects in this mode of appeal,14 for "[t]he Supreme
Court is not a trier of facts."15 Factual findings of the CA may be reviewed on
appeal16 only under exceptional circumstances such as, among others, when
the inference is manifestly mistaken,17 the judgment is based on a
misapprehension of facts,18 or the CA manifestly overlooked certain relevant
and undisputed facts that, if properly considered, would justify a different
conclusion.19
In the present case, petitioner has not given the Court sufficient cogent
reasons to disturb the conclusion of the CA that the weather encountered by
the vessel was not a "storm" as contemplated by Article 1734(1). Established is
the fact that between 10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26,
1990, M/V Central Bohol encountered a southwestern monsoon in the course
of its voyage.
The Note of Marine Protest,20 which the captain of the vessel issued under
oath, stated that he and his crew encountered a southwestern monsoon about
2200 hours on July 25, 1990, and another monsoon about 2400 hours on July
26, 1990. Even petitioner admitted in its Answer that the sinking of M/V
Central Bohol had been caused by the strong southwest monsoon.21 Having
made such factual representation, it cannot now be allowed to retreat and
claim that the southwestern monsoon was a "storm."
The pieces of evidence with respect to the weather conditions encountered by
the vessel showed that there was a southwestern monsoon at the time.
Normally expected on sea voyages, however, were such monsoons, during
which strong winds were not unusual. Rosa S. Barba, weather specialist of the
Philippine Atmospheric Geophysical and Astronomical Services
Administration (PAGASA), testified that a thunderstorm might occur in the
midst of a southwest monsoon. According to her, one did occur between 8:00
p.m. on July 25, 1990, and 2 a.m. on July 26, 1990, as recorded by the
PAGASA Weather Bureau.22
Nonetheless, to our mind it would not be sufficient to categorize the weather
condition at the time as a "storm" within the absolutory causes enumerated in
the law. Significantly, no typhoon was observed within the Philippine area of
responsibility during that period.23
According to PAGASA, a storm has a wind force of 48 to 55 knots, 24 equivalent
to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of
the vessel stated that the wind was blowing around force 7 to 8 on the Beaufort
Scale.25 Consequently, the strong winds accompanying the southwestern
monsoon could not be classified as a "storm." Such winds are the ordinary
vicissitudes of a sea voyage.26
Even if the weather encountered by the ship is to be deemed a natural disaster
under Article 1739 of the Civil Code, petitioner failed to show that such natural
disaster or calamity was the proximate and only cause of the loss. Human
agency must be entirely excluded from the cause of injury or loss. In other
words, the damaging effects blamed on the event or phenomenon must not
have been caused, contributed to, or worsened by the presence of human
participation.27 The defense of fortuitous event or natural disaster cannot be
successfully made when the injury could have been avoided by human
precaution.28
Hence, if a common carrier fails to exercise due diligence -- or that ordinary
care that the circumstances of the particular case demand -- to prevent or
minimize the loss before, during and after the occurrence of the natural
disaster, the carrier shall be deemed to have been negligent. The loss or injury
is not, in a legal sense, due to a natural disaster under Article 1734(1).29
We also find no reason to disturb the CA’s finding that the loss of the vessel
was caused not only by the southwestern monsoon, but also by the shifting of
the logs in the hold. Such shifting could been due only to improper stowage.
The assailed Decision stated:
"Notably, in Master Cahatol’s account, the vessel encountered the first
southwestern monsoon at about 1[0]:00 in the evening. The monsoon
was coupled with heavy rains and rough seas yet the vessel withstood
the onslaught. The second monsoon attack occurred at about 12:00
midnight. During this occasion, the master ‘felt’ that the logs in the hold
shifted, prompting him to order second mate Percival Dayanan to look
at the bodega. Complying with the captain’s order, 2nd mate Percival
Dayanan found that there was seawater in the bodega. 2nd mate
Dayanan’s account was:
 ‘14.T - Kung inyo pong natatandaan ang mga pangyayari, maari
mo bang isalaysay ang naganap na paglubog sa barkong M/V
Central Bohol?
‘S - Opo, noong ika-26 ng Julio 1990 humigit kumulang alas 1:20
ng umaga (dst) habang kami ay nagnanabegar patungong
Maynila sa tapat ng Cadlao Island at Cauayan Island sakop ng El
Nido, Palawan, inutusan ako ni Captain Enriquito Cahatol na
tingnan ko ang bodega; nang ako ay nasa bodega, nakita ko ang
loob nang bodega na maraming tubig at naririnig ko ang malakas
na agos ng tubig-dagat na pumapasok sa loob ng bodega ng
barko; agad bumalik ako kay Captain Enriquito Cahatol at sinabi
ko ang malakas na pagpasok ng tubig-dagat sa loob nang bodega
ng barko na ito ay naka-tagilid humigit kumulang sa 020
degrees, nag-order si Captain Cahatol na standby engine at
tinawag ang lahat ng mga officials at mga crew nang maipon
kaming lahat ang barko ay naka-tagilid at ito ay tuloy-tuloy ang
pagtatagilid na ang ilan sa mga officials ay naka-hawak na sa
barandilla ng barko at di-nagtagal sumigaw nang ABANDO[N]
SHIP si Captain Cahatol at kami ay nagkanya-kanya nang
talunan at languyan sa dagat na malakas ang alon at nang ako ay
lumingon sa barko ito ay di ko na nakita.’
"Additionally, [petitioner’s] own witnesses, boatswain Eduardo Viñas
Castro and oiler Frederick Perena, are one in saying that the vessel
encountered two weather disturbances, one at around 10 o’clock to 11
o’clock in the evening and the other at around 12 o’clock midnight. Both
disturbances were coupled with waves and heavy rains, yet, the vessel
endured the first and not the second. Why? The reason is plain. The
vessel felt the strain during the second onslaught because the logs in the
bodega shifted and there were already seawater that seeped inside."30
The above conclusion is supported by the fact that the vessel proceeded
through the first southwestern monsoon without any mishap, and that it began
to list only during the second monsoon immediately after the logs had shifted
and seawater had entered the hold. In the hold, the sloshing of tons of water
back and forth had created pressures that eventually caused the ship to sink.
Had the logs not shifted, the ship could have survived and reached at least the
port of El Nido. In fact, there was another motor launch that had been buffeted
by the same weather condition within the same area, yet it was able to arrive
safely at El Nido.31
In its Answer, petitioner categorically admitted the allegation of respondent in
paragraph 5 of the latter’s Complaint "[t]hat at about 0125 hours on 26 July
1990, while enroute to Manila, the M/V ‘Central Bohol’ listed about 10 degrees
starboardside, due to the shifting of logs in the hold." Further, petitioner
averred that "[t]he vessel, while navigating through this second southwestern
monsoon, was under extreme stress. At about 0125 hours, 26 July 1990, a thud
was heard in the cargo hold and the logs therein were felt to have shifted. The
vessel thereafter immediately listed by ten (10) degrees starboardside."32
Yet, petitioner now claims that the CA’s conclusion was grounded on mere
speculations and conjectures. It alleges that it was impossible for the logs to
have shifted, because they had fitted exactly in the hold from the port to the
starboard side.
After carefully studying the records, we are inclined to believe that the logs did
indeed shift, and that they had been improperly loaded.
According to the boatswain’s testimony, the logs were piled properly, and the
entire shipment was lashed to the vessel by cable wire.33 The ship captain
testified that out of the 376 pieces of round logs, around 360 had been loaded
in the lower hold of the vessel and 16 on deck. The logs stored in the lower
hold were not secured by cable wire, because they fitted exactly from floor to
ceiling. However, while they were placed side by side, there were unavoidable
clearances between them owing to their round shape. Those loaded on deck
were lashed together several times across by cable wire, which had a diameter
of 60 millimeters, and were secured from starboard to port.34
It is obvious, as a matter of common sense, that the manner of stowage in the shipowner and the captain.37 It has already been established that the sinking of
lower hold was not sufficient to secure the logs in the event the ship should roll M/V Central Bohol had been caused by the fault or negligence of the ship
in heavy weather. Notably, they were of different lengths ranging from 3.7 to captain and the crew, as shown by the improper stowage of the cargo of logs.
12.7 meters.35 Being clearly prone to shifting, the round logs should not have "Closer supervision on the part of the shipowner could have prevented this
been stowed with nothing to hold them securely in place. Each pile of logs fatal miscalculation."38 As such, the shipowner was equally negligent. It cannot
should have been lashed together by cable wire, and the wire fastened to the escape liability by virtue of the limited liability rule.
side of the hold. Considering the strong force of the wind and the roll of the
waves, the loose arrangement of the logs did not rule out the possibility of WHEREFORE, the Petition is DENIED, and the assailed Decision and
their shifting. By force of gravity, those on top of the pile would naturally roll Resolution AFFIRMED. Costs against petitioner.
towards the bottom of the ship.
SO ORDERED.
The adjuster’s Report, which was heavily relied upon by petitioner to
strengthen its claim that the logs had not shifted, stated that "the logs were
still properly lashed by steel chains on deck." Parenthetically, this statement
referred only to those loaded on deck and did not mention anything about the
condition of those placed in the lower hold. Thus, the finding of the surveyor
that the logs were still intact clearly pertained only to those lashed on deck.

The evidence indicated that strong southwest monsoons were common

occurrences during the month of July. Thus, the officers and crew of M/V
Central Bohol should have reasonably anticipated heavy rains, strong winds
and rough seas. They should then have taken extra precaution in stowing the
logs in the hold, in consonance with their duty of observing extraordinary
diligence in safeguarding the goods. But the carrier took a calculated risk in
improperly securing the cargo. Having lost that risk, it cannot now escape
responsibility for the loss.

Second Issue:

Doctrine of Limited Liability

The doctrine of limited liability under Article 587 of the Code of Commerce36 is
not applicable to the present case. This rule does not apply to situations in
which the loss or the injury is due to the concurrent negligence of the